Recovery Action and the outstanding Council Tax Benefit claim.

People experiencing financial hardship can apply for Council Tax Benefit but that is not always the complete answer, especially if someone is late with their application or they do not qualify for maximum benefit, perhaps because of income marginally above the scale limits, or due to a non-dependent living in the home.

Billing Authorities frequently are faced with recovering Council Tax from people in receipt of Council Tax Benefit, and sometimes there is a claim for benefit outstanding at the time enforcement action is being considered. From a ‘good practice’ point of view what should the Billing Authority do then?

Each case should be considered on its own merits as circumstances vary, so always consider on a case by case basis. If there is an outstanding benefit claim awaiting determination, it should not be assumed that this is the council's fault, but equally it should not be assumed it is due to a late claim by the taxpayer.  The reality is that sometimes it will be due to one cause and sometimes the other.  Sometimes there may be an element on both sides that has caused the claim to be outstanding.

Often the first thought is to suppress the enforcement action until the benefit claim has been decided and then to allow time for the sum due to be paid, or new instalments to be arranged.  There is little to be gained by enforcing payment of a sum that will later not be due or not be due in full.  But when a decision has been taken to suppress enforcement action on a case it must always be linked to a forward diary note to review the case later.  No recovery suppression should be allowed to operate indefinitely without a periodic review to establish the current position.

A decision to suppress recovery action should not be made automatically.  There may be circumstances where it would be appropriate to continue with enforcement action despite the outstanding benefit claim.  For example, in an extreme case, the debtor may have made the claim solely in order to delay enforcement action.  If there is any reason to believe that there is not good will on the part of the debtor, it may be better to proceed to obtain a liability order, whilst assuring the debtor that if they do qualify for benefit the debt will be reduced and any overpayment will be refunded.  Factors that might be considered would include how co-operative the taxpayer had been in providing the information and evidence required in order to take a decision on the claim. Delaying recovery action in certain cases when a benefit claim is outstanding and then proves to be unsuccessful often can lead to greater hardship for the customer as they have a reduced number of months to pay the outstanding sum.

The existence of an undecided benefit claim is not in itself, a defence against a liability order being granted.  In the case of R v Bristol City Magistrates Court and Bristol City Council ex parte Willsman and Young (1991) the High Court decided that liability orders against persons with undetermined benefit applications were valid because when the orders were made, those persons were liable to pay the full amount despite outstanding benefit claims, which the authority had failed to determine within the statutory period. This confirmed a previous decision regarding a Rate Rebate application in Preston BC v Pamphlin (QBD)(1980). This was further clarified in the case R (Williams) v Pontefract Magistrates Court & Wakefield MBC (QBD) 2002 which confirmed that “a Liability Order hearing was wrongly adjourned where a challenge was made to whether Council Tax Benefit was correctly awarded or not.

However it should be noted that guidelines issued by the then Department Of Environment (DOE) in early 1995 recommended that Billing Authorities should have consideration for good practice. Therefore where a benefit claim is awaiting determination at any stage of the recovery process (i.e.) either pre or post liability order, no recovery proceedings should be commenced until a decision has been made. This is however only guidance not the law  but Ombudsman decisions where such cases have gone to court and then found to be wrong because CTB awarded resulted in overpayments, have resulted in awards in as much as £3-4000 for inconvenience and financial difficulties caused. 

So, as is often the case, there is no right or wrong answer to enforcement where a benefit claim is outstanding, and each situation must be judged on its own merits, but to avoid criticism, the authority should strive to ensure that benefit claim processing, is as up to date as possible and to ensure that cases due for liability order listing are resolved before the court action becomes necessary.  Cross checking the court lists with benefits to ensure that there are no outstanding matters and if there are, only proceed on those cases that it would appear the benefit award will make little difference (such as a recent claim, or a claim made for vexatious reasons) and the obtaining of the order is likely to simply delay the process of the court action not remove the need for it later.